GSK profits soar despite US tax change

February 8, 2018

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British pharmaceutical giant GlaxoSmithKline factory in Shanghai/AFP

By AGENCE FRANCE PRESSE, London, United Kingdom, Feb 8 – British drugs giant GlaxoSmithKline said Wednesday that net profits jumped 70 percent last year on bumper sales, despite a fourth-quarter loss that was partly sparked by US tax changes.

The annual performance was lifted by sales growth across its three main businesses, which comprise pharmaceuticals, vaccines and consumer healthcare.

Earnings won another boost from a lower accounting charge on the falling valuation of some of its HIV and vaccine activities.

GSK was buoyed also by a Brexit-hit weak pound, which made its exports cheaper for customers using stronger currencies.

Profits after tax rallied to around £1.5 billion (1.7 billion euros, $2.1 billion) last year, GSK said in a result statement.

Revenues rose eight percent to £30.2 billion over the course of 2017.

“In 2017 GSK delivered encouraging results from across the company with sales growth in each of our three global businesses,” said chief executive Emma Walmsley.

However, GSK made a net loss of £546 million in the final three months of 2017, after a profit of £257 million a year earlier.

The group took a large hit of more than £1.0-billion from US President Donald Trump’s tax reforms.

Trump has signed into law a sweeping overhaul of the US tax code.

The measure is expected to boost corporate profits over the medium and long term by lowering the corporate tax rate to 21 percent from 35 percent.

However, several large corporations have signaled that the law will result in a short-term hit on earnings repatriated from overseas and due to revaluation of assets.

Turning to the 2018 outlook, GSK expressed caution owing to the impact of possible generic competition for its blockbuster asthma drug Advair in the key US market.

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